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Non-Federal Share: Head StartPresented by Reginald Walker, MBA

Chicago, ILApril 27, 2005

This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

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REFERENCED PERFORMANCE STANDARDS

Grantee

– 1304.40(d)(3) Programs must provide parents with opportunities to participate as employees or volunteers

– 1304.41(a)(3) Agencies must perform outreach to encourage volunteers from the community to participate in the program

Policy Group

– 1304.50(d)(2)(iv) Assist in recruiting volunteer services from parents, community residents, and community organizations

– 1304.52(b)(3) Current and former parents must receive preference for employment vacancies for which they are qualified

Other

– Sec. 1301.20 Matching requirements

– Sec. 1301.21 Criteria for increase in federal financial assistance

– Sec. 1303.8 Waiver of requirements;

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REFERENCED PERFORMANCE STANDARDS

Other

– Sec. 1306.23 Training

– Sec. 74.23 Cost sharing or matching

– Sec. 92.24 Matching or cost sharing

– OMB A-122, "Cost Principles for Non-Profit Organizations“

– OMB A-87, "Cost Principles for State, Local, and Indian Tribal Governments“

– OMB A-21 Cost Principles for Educational Institutions

10. INFORMATION MEMOS/PROGRAM INSTRUCTIONS:

– IM-HS-01-13: Budgeting for Partnerships between Child Care and Head Start

– IM-01-1105: Matching Requirements for American Indian/Alaska Native & Migrant and Seasonal Agencies

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DEFINITIONS

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DEFINITIONS

Total Costs = Costs incurred by a grantee, including in-kind contributions.

Matching Share = Costs that is the responsibility of the recipient

– Match may be cash or non cash (good and services)

– Cash Contributions:

Cash Contributions – From any Non Federal Source

Match must be expended during the project period

Cash match is counted when it is spent, not when it’s donated or generated.

– Non Cash Contributions

Must benefit the program

may be real property, equipment, goods and services

counted for the period when the services are provided

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REQUIREMENTS TO QUALIFY FOR MATCH

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GENERAL MATCH REQUIREMENTS

Head Start grants shall not exceed 80 percent of the total costs of the program; and

The non-Federal share will not exceed 20 percent of the total costs of the program. .

Total program cost

20%

80%

Non-federal

Federal Share

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GENERAL MATCH REQUIREMENTS

Basic Considerations:

– Allowable: Meets the requirements of the applicable cost principles;

– Reasonable: Does not exceed what would be normally incurred for a services or activity;

– Necessary: Needed to carryout a service or activity; and

– Allocable: Allocable to a cost objective, such as a grant, contract, project, service, or other activity.

The grant application must include budgets for the Federal and non-Federal funds.

The Financial Assistance Award (FAA) constitutes approval of both the Federal and non-Federal budgets.

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GENERAL MATCH REQUIREMENTS

The 269 must indicate total Federal matching expenditures in agreement with the approved budget.

Matching expenditures reported on the 269 require the same documentation as Federal expenditure

Programs with indefinite project periods are required to provide matching or cost-sharing on a budget period basis

The 15% administrative cost includes federal and non-federal share.

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SPECIFIC REQUIREMENTS

Verifiable from recipient’s records

Not included in another Federally-assisted project

Not paid for by any Federal dollars

In the approved budget

Meets other circular provisions

Volunteer services must be integral and necessary;

Labor rates must be compatible with rates in the organization and/or labor market (including fringe benefits)

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WAIVER OF MATCH REQUIREMENTS

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WAIVER

A waiver may be granted for full or portion of matching requirements if any of the following exist:

– The community lacks required resources

– The impact of the cost the agency may incurred in initial years

– The impact of an unanticipated increase in the cost of the agency

– The agency is located in a community adversely affected by a major disaster

– The impact on the community would be negative if the agency ceased to exist

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VOLUNTEER SERVICES

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VOLUNTEER SERVICES

Volunteer services can be counted as non federal share if all of the following exist:

– Service are a necessary part of the program– Labor rates are consistent with those paid by the program or the local labor market

for a similar function

– Skills aren’t found in the organization

– The work is controlled by the organization

– The service performed must be measurable and material

– The work must be documented

Signature, date of service and rate of pay of both the volunteer and staff

Explanation of the service performed

Volunteer services can be professional and technical personnel, consultants, other labor

Fringe benefits may be counted as non federal Share

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VOLUNTEER SERVICES

Examples of allowable volunteer services :– Time donated by community members, board, policy council, and parents in

management activities– The difference between a reduced rate or fee charged for goods or services as

opposed to the standard rate or fee– Time spent by parents working with their children in a Home Base program (if the

activities and time are written in the Home Visitor plan)– The use of the parent's homes for programmatic purposes may be valued– Center Based home visits and parent teacher conferences can be allowed; (if

required by the performance standards)– Time parents spend working with their children on activities outside the classroom is

unallowable; however– Structured exercises in which the parent and child participate can be allowable (if

required by the program standards and if not done at home)– Transportation costs is allowable, if not regularly provided to the center– Transportation for medical services if required by the performance standards

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VALUATING DONATED PROPERTY

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VALUATING DONATED PROPERTY

Property shall be value according to the recipient accounting policies, consider the following:

– Land and/or buildings shall not exceed the fair market value established by an independent appraiser; and certified by the recipient

– Equipment shall not exceed the fair market value of equipment of the same age and condition.

– Loaned space shall not exceed the fair rental value of comparable space

– Loaned equipment shall not exceed its fair rental value

If a third-party donates the use of equipment, or space but retains the title, the contribution shall be valued as followed:

– For Grantees Subject to Part 92, The contribution shall be valued at the fair rental rate of the equipment or space

– For Grantees Subject to Part 74, The equipment or space shall not exceed its fair rental value

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LOANED EQUIPMENT OR SPACE

If a third-party donates the use of equipment, or space but retains the title, the contribution shall be valued as followed:

– For Grantees Subject to Part 92, The contribution shall be valued at the fair rental rate of the equipment or space

– For Grantees Subject to Part 74, The equipment or space shall not exceed its fair rental value.

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DONATED SUPPLIES

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DONATED SUPPLIES

Supplies may include:

– Expendable property

– Office supplies

– Laboratory supplies or workshop

– Classroom supplies.

Supplies shall be reasonable; and not exceed the fair market value

Examples of allowable and Unallowable donated supplies include:

– Clothing donated to facilitate a program activity (e.g. costumes for holiday plays) is allowable

– Clothing to personally benefit the child or the family is unallowable

– Food used for programmatic purposes are allowable

– Gifts from parents are not allowable

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COMPUTATION OF MATCH

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COMPUTATION OF MATCH

Direct Method– Assume that the Federal funds = $150,000 – $150,000 X 20% = $30,000

– $30,000/.80= $37,500

– Total project costs are $187,500 ($150,000 + $37,500)

– Non Federal Share = $187,500 X 20% = $37,500

Indirect Method

– Gross up the 20% match requirement to get the effective rate: 20%/80% = 25%

– Multiply the effective rate by the amount of the Federal share = $150,000 X 25% = $37,500

– Non Federal Share = $37,500

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COMPUTATION OF A DISALLOWANCE

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COMPUTATION OF A DISALLOWANCE

Assume $187,500 approved project cost ($150,000 Federal funds + $37,500 In-Kind)

If $150,000 in Federal funds are expended and only $30,000 in Non-Federal share is approved then the actual project cost becomes $180,000 ($150,000 + $30,000)

Federal share of the actual project cost is $144,000 ($180,000 X 80%)

Difference between the federal share of the actual project cost and the expended project cost must be reimbursed the federal government as calculated below

Expended Federal Funds Based on Approved Budget $150,000

(Less) Federal Portion of Actual Project Cost 144,000

Refundable Federal Grant $ 6,000

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10 COMMON ERRORS REGARDING NON-FEDERAL SHARE 1. Inadequate or no documentation;

2. Overvaluing the donation of goods or services;

3. Including items that would not be allowable costs;

4. Matching Head Start Program with other Federal Funds

5. Matching multiple grants with the same In Kind

6. Valuing donations that were purchased with federal funds

Counting items that are furnished for personal use; (food and clothing)

8. Transportation by parents for personal convenience or transportation of employee's children by the employee;

9. Not obtaining an independent valuation of donated land or space

10. Including time spent by parents on activities in the home.

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5 POINTS TO REMEMBER ABOUT ALLOWABLE NON-FEDERAL

1. Must be something that could be charged to Head Start;

2. Not used as a match for other grants;

3. Be adequately documented;

4. Value should be based on what it would have cost if purchased; and

5. Base volunteer services on the nature of the service provided.